A champion of the open source model, Bob Waldie believes in the value of sharing information and being smart to succeed in IT. He also reckons that a little bit of failure does not hurt either.
When he is not working on the next Australian IT startup to unleash abroad, Bob Waldie can be found tending to his beef farm in Queensland, fishing for barramundi, or more recently immersing himself in the finer points of grape growing for his new boutique winery. But it’s the urge to get his hands dirty with startup tech companies that truly gets his blood pumping.
Waldie’s foray into IT was with Hartley Computer in 1980. A great opportunity for a young engineer, it allowed him to take part in the development of an early multi-processor computing system that received an Australian Design Award.
But like so many smart companies, Hartley eventually went into receivership, although this failure turned out to be the thing that forced him to go out on his own. "I learnt early on some of the commercial realities of the technology business.”
And he had clearly learned his lessons well. With some other engineers from Hartley, Waldie then founded Stallion Technologies, a pioneering remote connectivity company that ran for 10 years. The company amassed 80 staff throughout the UK, the US, Germany and Singapore, with revenues reaching $20 million at their peak. “This was a great business growth experience,” Waldie says.
Indicative of a general spirit amongst many Australian technology companies, Waldie recollects that while he and his team had very little knowledge of the market, the quality of their design ideas was what really drove them and ultimately determined their success.
“The key thing in Stallion was, while we were all very raw in terms of our knowledge, the guys I was with were pretty classy technologically. That can compensate for being somewhat ignorant when it comes to market realities.”
Waldie admits, however, that this strategy does not always work, especially if you have not done your homework.
Back in 1998, Waldie and a few associates formed what started as an online wholesale outlet for pharmacy products, eventually extending it into an e-tailing business. For an Australian company, it was way ahead of its time and in hindsight it was a potentially very smart idea. Still, its eventual failure was an important lesson Waldie says.
“Again it was a business that eventually folded and we found that something we were not good at was identifying trends in this space. To be a success in e-commerce you have to be in tune with the marketing realities.”
Stallion was eventually absorbed into LANtronics and remains for Waldie his first major capital experience, not to mention having given the budding entrepreneur valuable exposure to foreign markets. “I thoroughly enjoyed opening offices and meeting people around the world -- I did an MBA and read all the books.”
Like many in the local IT industry, Waldie believes that more often than not indigenous companies succeed despite themselves. It is a view that for him has crystalised after many years observing both the disorganised strategies of state and federal governments as well as an inherently misguided, albeit well meaning venture capitalist (VC) culture, still shackled by concepts that are more reflective of banking than genuine seed funding activities. “We still have a predominantly financial/regulated investment community,” Waldie says. To be fair, VCs have not been helped by the indigenous IT industry.
“You only have a successful VIC community sitting right beside a successful IT industry but I don’t think in Australia that we do have a very successful indigenous industry. IT is not on the current government’s list of important things.”
Not one generally drawn to the public sector, Waldie nevertheless found himself on the Queensland Government’s IIB (Information Industries Board) committee in 1997, where he oversaw the creation of a technology incubator program and was eventually appointed chairman. There are now four major incubators in the state. “That was probably the most tangible outcome,” Waldie says.
However, he learned that he was less effective in a government committee environment than being out there in the commercial world building companies from the ground up. “While I’d invested in a few businesses, what I really enjoyed doing was getting into startups.”
Around this time Waldie founded Moreton Bay Ventures, an embedded Linux appliance company, which he managed until its acquisition in 2000 by Nasdaq-listed company Lineo. Part of the deal was that Waldie would work as an engineer for Lineo in the US for a few years. “That was a different scale of operation for me. From an education perspective those two years were better than any management study I’ve ever done,” he says.
However, the company fell victim to the 2000 tech crash and he learnt another set of good commercial lessons. “I learned never again to sell for paper.”
The difference was that while the earlier company was about developing tools, SnapGear would focus on developing products for secure distributed network access, a market that Waldie expects will be one of the most significant segments of the IT management space over the next few years.
“With Lineo we did work for very large companies and we got a sense of what big companies wanted. You could say we got an inside track on the VPN market. That was another fortuitous thing.”
Still, serving as CEO and chairman, Waldie saw revenues grow to US$15 million by 2003 when the company was acquired by another Nasdaq company, CyberGuard.
By now, Waldie says it was time for his self-described mid-life crisis. He took a year off and went travelling and fishing for barramundi in northern Queensland. The scent of fresh air also led him to buying a 200-hectare farm where he still runs cattle. He is also looking into making wine.
“However, by mid 2004, I realised again that I had headed off down the wrong track. What really excites me is building IT businesses.”
Waldie’s current vision is that open source models of development and business will spread beyond software and into the hardware markets, spawning myriad new devices and solutions generally based on the sharing of core design smarts.
Coinciding with this trend, he predicts that notions of intellectual property will be outmoded within several years, and that companies will have to do a lot more than simply “protect” their ideas to succeed in the future.
“The notion we have today of the value of IP will start to erode within a decade,” Waldie says. “People need to think of more tangible things.”
Generally speaking the technology companies that truly succeed are those that are able to bring about genuine change, not only in processes but also in perception. “One thing I’ve learned is that it’s fine being a good company doing better, faster products but that doesn’t make a good international company. To be successful you need to be disruptive.”
Waldie cites the example of MP3 music files as the sort of effect that all, but especially Australian technology companies should strive for, otherwise don’t bother leaving home.
“When you do management school they don’t tell you how to create disruptive technologies. Unless you are disruptive you should not go overseas with your business”.
This is the key challenge for Australian companies, Waldie believes, especially for those that have aspirations of making it in the US.
Having successfully managed several Australian technology companies and sold them in the US, Waldie has discovered that the best strategy for budding startups today is for them to set themselves up as though they are already there.
One of his current ventures, PORTtel, is to help guide Australian and New Zealand companies through setting up in the US, covering everything from regulatory advice to gaining the necessary visas.
Waldie is also very active with the recently formed Anzatechnet, which is a support group for Australian and New Zealand companies looking to set up in the US. “In business it’s so important to find faces and make contacts -- it’s invaluable in making it in a big market like the US.”
However, the downside of styling companies as foreign concerns is that it can preclude them from government assistance programs, although Waldie thinks that it may be some time before local entrepreneurs view this as a major disadvantage. “Often the cost of participating in local schemes is greater than the benefits.”
Waldie’s latest company, Opengear, is essentially a US company, although almost all the executives, staff and investors are Australian, except for a 15 percent stake held by US-based investors.
In a way the company is a culmination of 25 years’ work for Waldie, both as an IT entrepreneur and a champion of the open source model.
It also brings back together former staff and investors. Tony Merenda, Opengear’s president, was a co-founder of Stallion in 1985. Further, the Waldie family has always been involved with Bob’s businesses, with two of his sons having worked for various ventures while his wife Mary has been financial controller at most of them.
Waldie estimates that the global market for so-called open source hardware is currently approaching US$1 billion with only a handful of players currently jostling for position. “Once it’s [open source] in hardware I think that it will move into a whole new design area.”
Opengear sells a range of open source console server and KVM solutions it hopes will gain it an early foothold in the booming market for remote systems administration solutions.
Operating like a “black box”, the device basically sits on top of computer servers in the data centre allowing for fast remote monitoring and management of issues.
Called out-of-band management, the concept is that companies can do remotely exactly what a system administrator would do on site. The company expects $2 million to $3 million in sales next year and currently has four staff in Australia and five in the US. Recently it announced new distribution partners in Australia and in China.
“We are making a very disruptive entry into the market,” Waldie says.
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